The Constitutional Convention of 1787 was held in strict secrecy. Consequently, anxious citizens gathered outside Independence Hall when the proceedings ended in order to learn what had been produced behind closed doors. The answer was provided immediately. A Mrs. Powel of Philadelphia asked Benjamin Franklin, "Well, Doctor, what have we got, a republic or a monarchy?" With no hesitation whatsoever, Franklin responded, "A republic, if you can keep it." ~ BENJAMIN FRANKLIN 1787

Thursday, June 16, 2016

See the editorial under the last picture. That says it all! But wait, "That's not all", read the following article on China's economy. The Emma Maersk, part of a Danish shipping line, is shown in the photos below.

What a ship....no wonder 'Made in China' is displacing North American made goods big time. This monster transports goods across the Pacific in just 5 days!! Another two will soon be commissioned..

These ships were commissioned by Wal-Mart to get their imported goods from China ... They hold an incredible 15,000 containers and have a 207 foot deck beam!! The full crew is just 13 people on a ship longer than a US Aircraft Carrier which has a crew of 5,000. With its 207' beam it is too big to fit through the Panama or Suez Canals. It is strictly transpacific. Cruise speed: 31 knots. The goods arrive four days before the typical container ship (18-20 knots) on a China-to-California run. 91% of Wal-Mart products are made in China. So this behemoth is hugely competitive even when carrying perishable goods. The ship was built in five sections.

The sections are floated together and then welded. The command bridge is higher than a 10 story building and has 11 cargo crane rigs that can operate simultaneously unloading the entire ship in less than two hours.

Editorial Comment!A recent documentary in late March, 2010 on the History Channel noted that all of these containers are shipped back to China, EMPTY! Yep, that's right.

We send nothing back on these ships. What does that tell you about the current financial state of the west in crisis? So folks, just keep on buying those imported goods (mostly gadgets) until you run out of money. Then you may wonder what the cause of unemployment (maybe even your job) in the U..S, UK, Canada and even in Australia????

Enough said!!!

NOW FOR A DIFFERENT VIEW ...

For the past year, Chinese selling of Treasuries has vexed investors and served as a gauge of the health of the world’s second-largest economy.

SO ... WHAT DO I HAVE TO LOOK FORWARD TO?

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, burnt through 20 percent of its war chest since 2014, dumping about $250 billion of U.S. government debt and using the funds to support the yuan and stem capital outflows.

While China’s sales of Treasuries have slowed, its holdings of U.S. equities are now showing steep declines.

The nation’s stash of American stocks sank about $126 billion, or 38 percent, from the end of July through March, to $201 billion, Treasury Department data show. That far outpaces selling by investors globally in that span -- total foreign ownership fell just 9 percent. Meanwhile, China’s U.S. government-bond stockpile was relatively stable, dropping roughly $26 billion, or just 2 percent.

"China’s U.S. portfolio doesn’t just consist of Treasuries,” said Brad Setser, a senior fellow at Council on Foreign Relations in New York. “To gauge China’s activity in the market it’s increasingly important to look beyond the Treasury market.”Pressure Signal

The liquidation of shares suggests China’s central bank was still under pressure to raise dollars and smooth the yuan’s depreciation even though Treasuries selling abated, including through suspected custodial accounts in Belgium. The equities reduction reminds investors that while China’s $1.4 trillion trove of Treasuries dwarfs its other foreign assets, it has accumulated enough U.S. stocks to influence global markets.

“Selling some of its equities is a reasonable way of raising the cash needed to finance the big drawdown in reserves,” said Setser, a former deputy assistant secretary for international economic analysis at the Treasury.

The PBOC’s press office directed questions to the State Administration of Foreign Exchange, the arm of the central bank that manages the nation’s reserves. Officials at SAFE didn’t respond to a request for comment.Market Sliver

While the amount China unloaded is a sliver of the $23 trillion U.S. equity market, it’s significant when compared with holdings of other big investors. The largest American mutual fund, the Vanguard Total Stock Market Index Fund, oversees about $373 billion.

The Treasury doesn’t break down its data into private and official holdings. Yet China’s capital controls limit the candidates capable of amassing such a hoard of U.S. equities. Also, private Chinese ownership of foreign stocks remained stable in 2015, signaling that the selling originated from an official source, SAFE data on international investments indicate.

Given that China’s private holdings of equities abroad are smaller than the nation’s U.S. holdings as reflected in the Treasury tally, “one can reasonably infer that SAFE, whose reserve assets are not included separately in the net international investment position, holds many of the equities," Setser said.Turmoil Buffer

Switching to selling stocks allows the PBOC to retain safer, more liquid assets such as Treasuries that it can unload easily in times of turmoil. Two rounds of declines in the yuan in the last 10 months spurred market volatility worldwide and led investors to monitor China’s reserves as a measure of how much of its war chest the country was burning through to combat capital flight.

Dumping equities may prove to be a savvy move, considering that the S&P 500 Index has gone 13 months without a new high on a closing basis. China, which more than doubled its holdings of U.S. stocks during the bull market that began in 2009, wouldn’t be alone among government-affiliated sellers of investments abroad. Sovereign funds from Qatar to the United Arab Emirates and Russia have been liquidating assets since crude began tumbling in 2014.

LIFE IN CHINA IS NOT GOING TO BE PRETTY

“The Chinese, or other people for that matter, are taking the view that sitting in U.S. equities is presumably quite risky, and I’m not surprised they’re shifting," said Fredrik Nerbrand, global head of asset allocation at HSBC Bank Plc in London. “This seems like more of a generation of cash more than anything else, and probably a de-risking of their portfolio.”